The dollar has retraced some of its gains against the British pound this morning. Despite continuing concerns about the state of the U.K. economy, investors responded positively to the announcement of a British government plan to provide lending to small businesses and firms needing equity investment. This effect was compounded by Federal Reserve Chairman Ben Bernanke's comments that changes to fiscal policy alone will not be enough to stimulate economic growth.

The market's negative reaction to Bernanke's statement, as well as speculation that data released today will show that U.S. retail sales declined in December, also led the dollar to pare back gains against the euro. However, the dollar's strengthening trend will likely continue as declining European production increases expectations for a rate cut by the ECB at their meeting tomorrow.

The Australian and New Zealand dollars advanced against their U.S. counterpart as positive Australian home-building data suggested that interest rate cuts are already having a significant effect in both countries. The currencies were also bolstered by rising commodity prices.

Economic releases today include U.S. retail sales, import prices, and business inventories data.